Manual on Fiscal Transparency (2007)

Front Matter

Front Matter

Dawn Rehm, and Taryn Parry
Published Date:
October 2007
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    © 2007 International Monetary Fund

    Production: IMF Multimedia Services Division

    Typesetting: Alicia Etchebarne-Bourdin

    Cataloging-in-Publication Data

    Manual on fiscal transparency/Fiscal Affairs Dept., International Monetary Fund—[Washington, D.C.]: International Monetary Fund, 2007—2007 rev. ed.

    p. cm.

    Includes bibliographical references.

    ISBN 9781589066618

    1. Fiscal policy—Handbooks, manuals, etc. 2. Disclosure of information—Handbooks, manuals, etc. I. International Monetary Fund. Fiscal Affairs Dept.

    HJ192.5.M35 2007

    Price: US$27.00

    Please send orders to:

    International Monetary Fund, Publication Services

    700 19th Street, N.W., Washington, D.C. 20431, U.S.A.

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    Abbreviations and Acronyms


    Classification of the Functions of Government


    Data Quality Assessment Framework


    European System of Accounts, 1995


    Financial Sector Assessment Program


    Generally accepted accounting principles


    General Data Dissemination System


    Gross domestic product


    Government finance statistics


    International Federation of Accountants


    Institute of Internal Auditors


    International Monetary Fund


    International Organization of Supreme Audit Institutions


    International Public Sector Accounting Standards


    Organization for Economic Cooperation and Development


    Poverty Reduction Strategy Paper


    Quasi-fiscal activities


    Report on the Observance of Standards and Codes


    Supreme audit institution


    Special Data Dissemination Standard


    System of National Accounts, 1993


    United Nations


    United Nations Commission on International Trade Law

    The Code

    Code of Good Practices on Fiscal Transparency

    The Guide

    Guide on Resource Revenue Transparency

    The Manual

    Manual on Fiscal Transparency


    The revised Code of Good Practices on Fiscal Transparency and the accompanying revision of the Manual on Fiscal Transparency mark important milestones in the Fund's promotion of openness and clarity in the presentation of fiscal policies and developments. In the decade since work began on the Code, it has gained acceptance across the Fund membership as the standard against which fiscal transparency should be judged, while the Manual has become the principal source of reference on approaches to improving fiscal transparency.

    The Code has been the basis on which nearly half of the Fund's membership has completed a Report on the Observance of Standards and Codes (ROSC) fiscal transparency module, and has allowed for more effective Fund surveillance of fiscal policies and developments. The Manual provides detailed guidance on good practices of fiscal transparency and, in this revision, further examples have been added drawing on ROSCs and other sources. The Manual also forges close links with the Guide on Resource Revenue Transparency, which was first published in 2005, and has now been updated in line with the revised Code and Manual.

    A broad public consultation process was undertaken for the revision of the Code, which greatly enriched its coverage and clarity. The consultation process embraced a wide range of stakeholders including country authorities, civil society organizations, international institutions, parliamentarians, academia, and the private sector.

    I would like to acknowledge the team from the Fiscal Affairs Department responsible for revising the Code and Manual: Richard Hemming, Jon Shields, Janet Stotsky, Taryn Parry, Dawn Rehm, Lynn MacFarlane, Ezequiel Cabazon, and Nadia Malikyar. I would also like to thank the many IMF colleagues who contributed to improvements in the Code and Manual, including the additional country examples of good practices. Martha Bonilla in the External Relations Department edited and coordinated this publication.

    Teresa Ter-Minassian


    Fiscal Affairs Department

    Code of Good Practices on Fiscal Transparency (2007)

    I. Clarity of Roles and Responsibilities

    1. 1.1The government sector should be distinguished from the rest of the public sector and from the rest of the economy, and policy and management roles within the public sector should be clear and publicly disclosed.
      1. 1.1.1The structure and functions of government should be clear.
      2. 1.1.2The fiscal powers of the executive, legislative, and judicial branches of government should be well defined.
      3. 1.1.3The responsibilities of different levels of government, and the relationships between them, should be clearly specified.
      4. 1.1.4Relationships between the government and public corporations should be based on clear arrangements.
      5. 1.1.5Government relationships with the private sector should be conducted in an open manner, following clear rules and procedures.
    2. 1.2There should be a clear and open legal, regulatory, and administrative framework for fiscal management.
      1. 1.2.1The collection, commitment, and use of public funds should be governed by comprehensive budget, tax, and other public finance laws, regulations, and administrative procedures.
      2. 1.2.2Laws and regulations related to the collection of tax and nontax revenues, and the criteria guiding administrative discretion in their application, should be accessible, clear, and understandable. Appeals of tax or non-tax obligations should be considered in a timely manner.
      3. 1.2.3There should be sufficient time for consultation about proposed laws and regulatory changes and, where feasible, broader policy changes.
      4. 1.2.4Contractual arrangements between the government and public or private entities, including resource companies and operators of government concessions, should be clear and publicly accessible.
      5. 1.2.5Government liability and asset management, including the granting of rights to use or exploit public assets, should have an explicit legal basis.

    II. Open Budget Processes

    1. 2.1Budget preparation should follow an established timetable and be guided by well-defined macroeconomic and fiscal policy objectives.
      1. 2.1.1A budget calendar should be specified and adhered to. Adequate time should be allowed for the draft budget to be considered by the legislature.
      2. 2.1.2The annual budget should be realistic, and should be prepared and presented within a comprehensive medium-term macroeconomic and fiscal policy framework. Fiscal targets and any fiscal rules should be clearly stated and explained.
      3. 2.1.3A description of major expenditure and revenue measures, and their contribution to policy objectives, should be provided. Estimates should also be provided of their current and future budgetary impact and their broader economic implications.
      4. 2.1.4The budget documentation should include an assessment of fiscal sustainability. The main assumptions about economic developments and policies should be realistic and clearly specified, and sensitivity analysis should be presented.
      5. 2.1.5There should be clear mechanisms for the coordination and management of budgetary and extrabudgetary activities within the overall fiscal policy framework.
    2. 2.2There should be clear procedures for budget execution, monitoring, and reporting.
      1. 2.2.1The accounting system should provide a reliable basis for tracking revenues, commitments, payments, arrears, liabilities, and assets.
      2. 2.2.2A timely midyear report on budget developments should be presented to the legislature. More frequent updates, which should be at least quarterly, should be published.
      3. 2.2.3Supplementary revenue and expenditure proposals during the fiscal year should be presented to the legislature in a manner consistent with the original budget presentation.
      4. 2.2.4Audited final accounts and audit reports, including reconciliation with the approved budget, should be presented to the legislature and published within a year.

    III. Public Availability of Information

    1. 3.1The public should be provided with comprehensive information on past, current, and projected fiscal activity and on major fiscal risks.
      1. 3.1.1The budget documentation, including the final accounts, and other published fiscal reports should cover all budgetary and extrabudgetary activities of the central government.
      2. 3.1.2Information comparable to that in the annual budget should be provided for the outturns of at least the two preceding fiscal years, together with forecasts and sensitivity analysis for the main budget aggregates for at least two years following the budget.
      3. 3.1.3Statements describing the nature and fiscal significance of central government tax expenditures, contingent liabilities, and quasi-fiscal activities should be part of the budget documentation, together with an assessment of all other major fiscal risks.
      4. 3.1.4Receipts from all major revenue sources, including resource-related activities and foreign assistance, should be separately identified in the annual budget presentation.
      5. 3.1.5The central government should publish information on the level and composition of its debt and financial assets, significant nondebt liabilities (including pension rights, guarantee exposure, and other contractual obligations), and natural resource assets.
      6. 3.1.6The budget documentation should report the fiscal position of subnational governments and the finances of public corporations.
      7. 3.1.7The government should publish a periodic report on long-term public finances.
    2. 3.2Fiscal information should be presented in a way that facilitates policy analysis and promotes accountability.
      1. 3.2.1A clear and simple summary guide to the budget should be widely distributed at the time of the annual budget.
      2. 3.2.2Fiscal data should be reported on a gross basis, distinguishing revenue, expenditure, and financing, with expenditure classified by economic, functional, and administrative category.
      3. 3.2.3The overall balance and gross debt of the general government, or their accrual equivalents, should be standard summary indicators of the government fiscal position. They should be supplemented, where appropriate, by other fiscal indicators, such as the primary balance, the public sector balance, and net debt.
      4. 3.2.4Results achieved relative to the objectives of major budget programs should be presented to the legislature annually.
    3. 3.3A commitment should be made to the timely publication of fiscal information.
      1. 3.3.1The timely publication of fiscal information should be a legal obligation of government.
      2. 3.3.2Advance release calendars for fiscal information should be announced and adhered to.

    IV. Assurances of Integrity

    1. 4.1Fiscal data should meet accepted data quality standards.
      1. 4.1.1Budget forecasts and updates should reflect recent revenue and expenditure trends, underlying macroeconomic developments, and well-defined policy commitments.
      2. 4.1.2The annual budget and final accounts should indicate the accounting basis used in the compilation and presentation of fiscal data. Generally accepted accounting standards should be followed.
      3. 4.1.3Data in fiscal reports should be internally consistent and reconciled with relevant data from other sources. Major revisions to historical fiscal data and any changes to data classification should be explained.
    2. 4.2Fiscal activities should be subject to effective internal oversight and safeguards.
      1. 4.2.1Ethical standards of behavior for public servants should be clear and well publicized.
      2. 4.2.2Public sector employment procedures and conditions should be documented and accessible to interested parties.
      3. 4.2.3Procurement regulations, meeting international standards, should be accessible and observed in practice.
      4. 4.2.4Purchases and sales of public assets should be undertaken in an open manner, and major transactions should be separately identified.
      5. 4.2.5Government activities and finances should be internally audited, and audit procedures should be open to review.
      6. 4.2.6The national revenue administration should be legally protected from political direction, ensure taxpayers’ rights, and report regularly to the public on its activities.
    3. 4.3Fiscal information should be externally scrutinized.
      1. 4.3.1Public finances and policies should be subject to scrutiny by a national audit body or an equivalent organization that is independent of the executive.
      2. 4.3.2The national audit body or equivalent organization should submit all reports, including its annual report, to the legislature and publish them. Mechanisms should be in place to monitor follow-up actions.
      3. 4.3.3Independent experts should be invited to assess fiscal forecasts, the macroeconomic forecasts on which they are based, and their underlying assumptions.
      4. 4.3.4A national statistical body should be provided with the institutional independence to verify the quality of fiscal data.
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